Nigeria: Senate Says Economy in Danger, As FG Spends N11trn On Subsidy Payment in 6 Yrs

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(file photo).
31 May 2019

The Senate, yesterday, raised the alarm that the nation has spent not less than N11 trillion on oil subsidy payment in six years, warning that further payment could kill the economy.

Consequently, the Senate asked the Federal Government to put an end to the payment of oil subsidy, which it described as a drain on the economy.

The lawmakers also called for the building of new refineries to finally put an end to fuel subsidy payment in the country.

Resolutions of the Senate were a sequel to the consideration of a report of the Senator Kabiru Marafa (APC, Zamfara Central)-led Committee on Petroleum, Downstream on Promissory Note Programme and a Bond Issuance to Settle Inherited Local Debts and Contractual Obligations to Petroleum Marketers.

In his presentation, yesterday, Marafa said the committee observed that there were differences in submissions made by the Federal Ministry of Finance, Petroleum Products Pricing Regulatory Agency, PPPRA, and oil marketers.

According to him, all the subsidy arrears' claims were based on three inter-related elements, namely subsidy, forex differentials and bank interests on unpaid claims.

Okays N129bn subsidy payment to 67 oil marketers

Meanwhile, the Senate, yesterday, approved the payment of N129 billion as subsidy arrear claims to 67 petroleum marketers.

The approval followed the adoption of the report of Senator Marafa-led Committee on Petroleum Downstream.

The Senate has, however, adjourned till June 6 for its valedictory session.

Some of the oil marketers are AA Rano, Ascon, Aiteo, Total, MRS Oil & Gas Limited, Sahara Energy, Oando PLC, A-Z Petroleum, Masters Energy, Northwest Petroleum, Fresh Energy, Forte Oil, Integrated Oil among others.

It would be recalled that the Senate had on Tuesday approved N69 billion as oil subsidy claim for Premium Motor Spirit for 19 oil marketers.

Senator Marafa said: "That the recent request computation is based on one of the already identified elements (forex differential).

"That due to scarcity of forex within the period, oil marketing companies were allowed to source forex outside CBN rate to enable them to meet the country's petroleum products demand.

"That NNPC Retail gets its petroleum product allocation directly from PPPMC at an already subsidised rate and so does not require forex to transact its business."

Some of the oil marketers and the amount approved for them include Total Nigeria Plc, N13.7 billion; Northwest Petroleum, N11.4 billion; Masters Energy, N10 billion; MRS Oil Plc, N8.8 billion; and Sahara Energy, N8.4 billion.

Others are MRS Oil & Gas Limited, N6.3 billion; Nipco Plc, N4.2 billion; Forte Oil, N3.9 billion; DEEJONES Petroleum & Gas, N4.1 billion; Emadeb, N4 billion, among others.

Senators call for an end to subsidy payment

In his contribution, Senator Barnabas Gemade said: "What has happened to those who defrauded the nation? I believe the 9th Senate will do justice to know what has happened to this money."

On his part, Chairman, Senate Committee on Public Accounts, Senator Matthew Urhoghide (PDP, Edo South), expressed concern that more subsidy requests would come in the incoming Ninth Assembly because "the computations were not properly done".

He said: "Government should be serious in its policies and not be directionless in executing these policies."

On his part, Senator Bassey Akpan (PDP, Akwa Ibom), said: " I submit totally to this initiative as this will add value to the petroleum sector."

Also in his contribution, Senator Victor Umeh (APGA, Anambra), said: "It is very sad for the country that the crude that we use to drive our cars is not manufactured in Nigeria and the cash spent on this is outrageous.

In his remarks, Deputy Senate President, Senator Ike Ekweremadu, who presided, lamented that Nigerian National Petroleum Corporation, NNPC, now charges subsidy claims on the Consolidated Revenue Fund of the Federation, a development he described as unconstitutional.

Ekweremadu said: "Let me thank Senator Marafa and his colleagues for the painstaking work they have done in respect of this report.

"Distinguished Colleagues, I want us to note that we are coming to closure on this as parliamentarians. I hope we can close the books in respect of that and think of the best way to deal with the subsidy issues.

"The factory aspect of it is what Senator Yusuf told us; the issue of subsidy is now a first line charge on oil drilling which is extremely dangerous.

"I hope that the next Assembly will be able to sit with the Executive to address this issue and resolve it without creating unnecessary tension. The NNPC needs to also caution itself, so it does not encroach on the appropriation responsibility of the National Assembly.

"Having said this, I would like to thank all of us for looking into this report and trying to find lasting solutions. I hope that those who are owing are able to pay back the banks and get back to their businesses while we find lasting solutions to the issue of subsidy.

"We need to do something about provisions of refineries in our country, it is not rocket science. Even if it does not resolve the issue of subsidy, we would have gone a long way in addressing it."

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